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Student Loan Forgiveness Program suspended: What happens now if you already applied?

The Biden Administration has stopped accepting applications for its Student Loan Forgiveness Program after a Texas judge struck it down. So, what’s next?

Student Loan Forgiveness temporarily blocked

Student loan borrowers that have applied, or wishing to do so, for forgiveness of their debt under the Biden administration’s program find themselves in limbo after a Texas federal judge declared it illegal. The ruling on Thursday was the second such since the Department of Education launched its online portal for borrowers to submit an application.

However, while the first on 21 October put a pause on processing applications already submitted, this second court decision has prompted the Education Department to stop accepting new applications. Millions have already applied and over half of those have been processed. So, what will happen next?

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What happens now if you already applied for student loan forgiveness?

Despite the two decisions against the student loan forgiveness program, the fate of the student loan forgiveness program will be decided through the appeals process. Immediately after the decision by Judge Mark Pittman of the US District Court for the Northern District of Texas, a 2019 Trump appointment, the Department of Justice appealed the ruling to the 5th US Circuit Court of Appeals.

The whole process could take months to sort itself out with the potential to go to the Supreme Court. Until there is a final ruling the Biden administration will have to wait to formally cancel federal student loan debt contemplated under the program.

However, the Education Department had already received 26 million applications before the online portal posted the following announcement: “Courts have issued orders blocking our student debt relief program. As a result, at this time, we are not accepting applications. We are seeking to overturn those orders.”

What happens now if you already applied for student loan forgiveness?

Borrowers that have already submitted a student loan debt forgiveness form will have to be patient, but will not have to reapply should the Biden administration come out victorious in the court battles. In the meantime, they can check the Federal Student Aid website for further information or sign up to receive notifications.

“For the 26 million borrowers who have already given the Department of Education the necessary information to be considered for debt relief, 16 million of whom have already been approved for relief, the Department will hold onto their information so it can quickly process their relief once we prevail in court,” said White House press secretary Karine Jean-Pierre in a statement Thursday.

Education Secretary Miguel Cordona told borrowers that his department would take about six weeks to process applications once they were submitted. However, for those 16 million borrowers that have been approved, their debt can’t be discharged until the court battles are resolved.

The Biden administration had hoped to that borrowers that had applied before mid-November would be able to have their debt canceled before repayments are set to begin on 1 January 2023 after the moratorium expires. Without an emergency stay on the Texas ruling, and the cancelation of a temporary stay by another court, student borrowers will have to prepare to make payments again until the whole matter is settled.